Passive hedging refers to a currency management strategy that aims to neutralise all or part of the currency risks of an underlying portfolio.

If a currency overlay manager is used to implement a passive hedging strategy, the manager will normally not be allowed to vary the hedge ratio but may be required to collate and analyse information about the underlying portfolio in order to determine the amounts to be hedged and other variables.


Keywords: currency hedging, currency overlay, currency management, currency overlay manager, passive hedging.

Currency management guide